California, for instance, has ordered auto carriers to refund presidents for under-used premiums.
Some auto insurance companies are offering credits and refunds in the midst of the ongoing coronavirus outbreak.
According to MarketWatch.com, several of the biggest insurers in the country have already begun offering discounts. State Farm—the United States’ largest carrier—told policyholders it’ll offer a 25% credit on premiums paid between mid-March and the end of May. In total, State Farm’s rebate will return $2 billion and affect more than 40 million vehicles.
Similar policies are being offered by other companies, too. Allstate and Liberty Mutual, for instance, are issuing 15% refunds on paid premiums. And GEICO will offer consumers the same amount in credit, to be applied towards future payments.
Robert Hunter, insurance director at the Consumer Federation of America, told MarketWatch that Americans should press insurers to offer more expansive discounts and additional flexibility.
“You’ve got that leverage,” Hunter said. “They want to hold onto their customers, they’ve got to treat them right.”
Hunter told MarketWatch that requests don’t have to be complicated or exceptional, because auto insurers base their rates on “normal conditions.” And with some two-hundred million Americans now restricted by shelter-in-place orders and stay-home directives, fewer people are on the roads than any other time in recent history.
To that end, Hunter recommends telling insurance representatives that “your risk is way lower, so my premium I paid is too high.”
Coverage from CBS News suggests that insurance companies may have anticipated pushback from bureaucrats, legislators, and attorneys. In California, for instance, officials have outright ordered carriers to refund premiums. State Insurance Commissioner Ricardo Lara issued the directive Monday, noting that motorists aren’t getting enough value from their premiums.
“With Californians driving fewer miles and many businesses closed due to the COVID-19 emergency, consumers need relief from premiums that no longer reflect their present-day risk of accident or loss,” Lara said. “Today’s mandatory action will put money back in people’s pockets when they need it most.”
California’s moving refunds beyond car insurance, though. CBS notes that healthcare professionals will also be reimbursed on malpractice premiums, as will companies with multiple peril and liability policies.
Massachusetts is purportedly considering similar measures. Earlier this week, state Attorney General Maura Healey sent a letter to the Division of Insurance, asking it to order companies in the state to lower premium rates immediately.
“People all across the state are staying home to reduce the spread of COVID-19,” Healey wrote on Monday. “As a result, there are fewer drives on the road, fewer car accidents, and lower risk involved, so people should be paying less. At a time when many are struggling financially, we should do everything we can to cut costs for families.”
MarketWatch estimates that, between the end of March and the beginning of April, vehicle traffic in the U.S. halved in comparison to the preceding months.